1. Vinyl is a booming part of the business, but it’s being held back.
Growing at a rate of 38.4 percent year over year, the old-school technology moved 5.6 million units in 2015. Vinyl sales would have been even bigger, says Passman, if existing vinyl-manufacturing plants were not already operating at capacity to meet demand.
2. The PRO challenge.
While performance right organizations ASCAP and BMI saw record revenue in 2014, Passman says their model is in trouble as fans move online, where songs are monetized at lower ad rates. And then there’s the Department of Justice consent decree review. Says Passman: “Hang on to your hats, small children and copyrights.”
3. “Freemium” is dragging down premium.
The ad-supported freemium model may be a gateway to premium paid subscriptions, but it also drags down per-user revenue. There’s a good reason why Apple and Rhapsody pay more per user to the music industry than Spotify, according to Passman: The latter’s freemium user base outnumbers paid subscribers at a rate of 3-to-1.
4. Et tu, YouTube?
Among the industry’s most pressing problems: unauthorized use of music on YouTube, which the veteran attorney likens to a game of “Whack-a-Mole.” Writes Passman: “No matter how many notices they send, the lemmings keep coming.”